Wednesday, December 14, 2011

An ode to the dismal science – or, why this time is different

I remember my first encounters with economics and finance at the university with considerable fondness: the sophistication with which economic activities were organized in our contemporary world and the compelling simplicity of some of the mathematical models proposed made it a joy for me to explore. And yet, already as a college student, it was clear to me that something critical was missing from all these models: they were not grounded in a realistic conception of human nature and the larger world we actually inhabit.

The widely apparent failure of communism with its naïve conception of human nature as essentially selfless and communitarian, made it prone to derision by economists, while at the same time the evident success of capitalism with its conception of human nature as selfish and rational, permitted it to stand often unquestioned in its apparent logic and utility. Over the past couple of decades, however, it has become increasingly clear that also this latter, rational and selfish conception of human nature is an erroneous conception of what it means to be human. Bit by tiny bit (as a facetious saying went - progress in economics occurs one death at a time), there is a shift occurring within the august hallways of our proud economists, management consultants and even managers themselves. Younger economists have been increasingly found looking over the fence of their little fiefdoms, peering into the rapidly sprouting pastures of modern biology, psychology and the complexity sciences in order to find new answers to the most pressing challenges of this day and age.

Will neo-liberalism, with its rational “utility function optimizers”, fall the wayside as communism had? The evidence is increasing that it will; indeed, it may soon be ridiculed as communism had, as being a fanciful and ultimately distorted, if not downright destructive, conception of human beings and how to arrange our social, political and economic activities.
But what will take its place?

That is the question to which nobody today has a compelling answer. Certain is only that insights from such fields such as evolutionary biology, neuropsychology or the sciences of emergence will continue to make forays into our comprehension of ourselves and the world we inhabit. And certain is also that we will have to decide what to do with this new knowledge: to what extent do we wish to experiment in structuring our socio-economic institutions in accordance to the hints we are getting from these sciences? Apart from the fact that we are only at the very, very beginning of this revolution in understanding (humbleness is required!), there remains a certain weariness in passing laws and building foundations on insights gleaned from the natural sciences. Too distasteful are the reminders of our flirtations with eugenics at the beginning of the past century, too aware are we of the deep ethical dilemmas they will inevitably press upon us.
And yet, I posit that this time will be different and that to close our eyes to them will be nothing less than folly. The understanding we will be gleaning will be simply too compelling, the stakes too high, the opportunities too great. For we are rapidly leaving the days of our blundering, collective childhood behind us, increasingly having the knowledge and tools to chart our own course on this planet with deliberation, equipped with more than simply our ideological leanings through which to perceive and structure our reality.

It is with this in mind that I would like to - in a loose, intermittent series of posts - take peeks at some of these insights from the natural sciences and what they may mean for how we think about and organize ourselves socially and economically.
I would be delighted to get your feedback!

Manuel Heer Dawson

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